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The rise of multi-label and lifestyle brands in China

In Beijing, it seems that everyone is opening up a vintage shop. From the American, retro-cowboy, rockabilly vintage of the shops in Gulou, to the more European vintage of Sanlitun’s House of Willow, there are so many different vintage boutiques that have mushroomed around the city. Vintage is still a niche market in general. It still has a concentrated appeal—it’s not for everyone. These shops complement their brick-and-mortar shops with E-commerce platforms that serve more for marketing purposes than actual sales. These WeChat platform are more like style blogs where everything it’s about lifestyle.

Beijing’s pioneer vintage shop: Mega Mega Vintage

Mainstream luxury vs niche luxury

Consumption in China is becoming more and more driven by genuine demand. Until recently, products that have been arousing interest among local consumers were those in the high-end brand segment. But now, their buying interests are clearly turning towards the items that they use in everyday life. This trend has been noticed by retail players, that started developing their products and services into interconnected systems with different complementary services and brands. Back when Louis Vuitton and Chanel entered the Chinese market, they catered a huge focus. As a consequence, so much imitation came out on the streets that nowadays you don’t know what’s real and what is not. That’s where the appeal of niche luxury came in. Because it’s one of a kind, or there are very few pieces in circulation, there’s no imitation and less chance of clashing with somebody who has the same bag.

Currently, with most younger Chinese still in something of a “honeymoon” period in regards to imported luxury and fashion, vintage or vintage-inspired fashion will likely remain a niche populated mostly by the avant-garde for the time being. However, this testifies how the consumer market is now undergoing tremendous restructuring, as Chinese middle class gain more purchasing power. A portion of these strong consumers has started to pursue individualistic and distinctive labels, with their interest gradually shifting from popular mainstream luxury brands to those that express unique personalities.

Alter, Shanghai. Image courtesy of neocha.com

This trend has led multi-brand stores to rapidly crop up in China

After I moved to Shanghai for work, I have been eating a lot of bagels. In fact, one of the favorite lunch spots of me and my colleagues is this recently opened bagel restaurant called Spread The Bagel, in Xintiandi. Apart from the amazing bagels, the location turned out to be quite interesting itself. The founder is in fact renting a portion of the retail space of Alter, a Chinese multi-brand store that imports a bunch of niche brands from Europe.

According to a report by RET, multi-brand stores in China experienced an extended phase of slow growth from 1996—when the first store opened in Shanghai—to 2009. In 2010, multi-brand stores entered a phase of furious growth and have been gradually expanding to the second- and third-tier cities. The number of new multi-brand stores opened between 2010 and 2013 is four times the sum of the past 14 years. Homegrown multi-brand stores now account for 55.6 percent of all multi-brand stores. Different from foreign-invested stores, which operate as large corporations, homegrown stores are primarily small-scale and independent ones that are geographically concentrated in Beijing, Shanghai, Guangzhou, Hangzhou, and Hong Kong. Presently, there are a total of 183 locations, covering 829 luxury brands. Some of the homegrown stores have begun chain expansion and to seek a presence in second- and third-tier cities. Two-thirds of the homegrown multi-brand stores have established an e-commerce platform. With lower operating cost and increased visibility as O2O’s main advantages, some of the leading stores in Beijing and Shanghai have been using WeChat for customer service and sales. Online sales reportedly account for 10 percent of total sales. Most multi-brand stores carry trendy, edgy products and fall on the mid- to low-priced sides, as their main consumer groups are usually younger and more expressive.

When brands or real estates host events, it’s normal for them to pay lots of cash for celebrity appearances. Prices can reach one million RMB for tier two celebrities on special events like Christmas or New Year’s Eve (also in Asia hottest moments of the year for commercial real estates). But now art world people have turned into testimonials for brands, such as the Swiss curator Hans Ulrich Obrist, who became a face for a Brioni campaign. Judy Lam, the Assistant General Manager of K11, spoke about “The Mall as New Museum” and introduced the brand’s “art mall” vision. Not only in Hong Kong, but also with several outlets in Mainland China, K11 Concepts is very active in bringing art to a mass audience. This is achieved not only by presenting artworks in the mall itself, but also by commissioning world-class exhibitions for the integrated exhibition spaces, such as “Master of Impressionism – Claude Monet” in their Shanghai mall in 2014.

But it works also the other way around. When holding or sponsoring exhibitions, brands can reach museums’ and galleries’ VIP networks. These organizations help exposing the brand through exclusive openings. Many luxury brand-sponsored China exhibitions at prestigious museums and galleries merge art, branding, and the products themselves. In the case of branded exhibitions, the luxury products are placed alongside art in an equal setting as in Gucci’s recent “No Longer / Not Yet”exhibition at the Minsheng Art Museum in Shanghai, or the items become art themselves—such as when Dior had prominent Chinese artists design their own interpretation of the classic Lady Dior handbag for its “Lady Dior as Seen By” exhibition. Other examples include Bottega Veneta’s “Art of Collaboration” exhibition at UCCA in Beijing, Dior’s Shanghai exhibition in 2014 and Beijing exhibition in 2015 featuring the Miss Dior fragrance reinterpreted by 17 female artists. Luxury and art collaborations “work best when there is a true connection between the exhibition and the brand’s history, values, and marketing strategy in China. If these things are aligned, it becomes possible to find very interesting ways of co-branding that allow both parties to reach a larger audience.

“Dutch Design X” at Four Seasons Hotel in Beijing. Image courtesy of ubigallery.com

The marriage between hospitality and luxury retail

The art community is not only flirting with shopping malls. Luxury art hotels have been rapidly popping up across China so quickly that fine art is almost a requirement for a new property to gain the attention of the ultra-elite. The idea that luxury can be a form of art in itself is gaining traction. While watches and jewelry have long been auction staples, leather goods are now entering the global auction scene, with China serving as the epicenter for the action. Top handbags are easier to sell and help to attract entry-level Chinese collectors to the auction scene. The auctions also don’t hurt the image of the luxury brands being sold, helping to solidify their status as investment pieces that will appreciate in value.

In China’s struggling high-end hospitality and luxury retail industries, a little strategic partnering with a luxury brand can be everything when it comes to elevating both brands in the eyes of the Chinese consumer. These partnerships allow guests to ‘experience’ the brands personally—as opposed to simply seeing them static on display in a store, or online. In today’s society in China where social class is very much defined by brand association, these collaborations have become a very popular means of defining ones own social status, and a personal statement of taste. One other result of these guest experiences is that they help secure market share and may boost sales for the hotels.

Image courtesy of mckynsey.com

The unique show-off experience

Collaborations between brands with different industry backgrounds can very well help them to compensate and adjust the way their products are perceived. For example when releasing their smart watch in China, Apple made the effort to focus on meeting the demands of wealthy consumers by partnering with top luxury brands like Hermès to boost its status as a high-end brand, and put a fashion twist on what was so far a geek product.

These collaborations are especially useful to create unique experiences that customers can share in the form of videos, photos, selfies or live broadcasts. These type of experiences are the most important “social currency” in China these days. For brands to succeed, they need to give consumers unique ‘show-off’ experiences. When two brands join their forces to host an event, reveal a product or a collection it is more likely to be or to be perceived as a one off thing, or a limited edition product etc. Luxury experiences are becoming the new status for the wealthy in China. With an evolving perspective of what denotes wealth, brands need to find more ways to make consumers feel ‘rich.’

Author

I'm a storyteller. I believe creativity is about enriching people’s lives with meaningful stories. My story begun about 30 years ago in Italy, and has kept me in China since I first moved in 2007.
My full Mandarin proficiency, together with my natural curiousity, allowed me to gain a deep understanding of consumer behaviour trends happening within China. My time in Beijing, Milan and Shanghai has given me the opportunity to work across many different fields ranging from exhibition design, creative marketing, landscape design, interactive installations, retail design, and graphic design, and I have been honored to work with some of the most forward-thinking companies.
Get in touch at michele.galeotto@gmail.com